“Petrochemical aircraft carrier” Hengli Petrochemical’s “dual cycle” development strategy has made significant progress.
It was learned on April 14 that Hengli Petrochemical Co., Ltd. (hereinafter referred to as “Hengli Petrochemical”, SH: 600346) announced that it plans to spin off its subsidiary Kanghui New Materials Technology Co., Ltd. (hereinafter referred to as “Kanghui New Materials”) Listing was achieved through reorganization with Dalian Thermal Power Co., Ltd. (hereinafter referred to as “Dalian Thermal Power”, SH: 600719).
After the spin-off is completed, the company’s equity structure will not change. Dalian Thermal Power will become the controlling shareholder of Kanghui New Materials, and Hengli Petrochemical will become the controlling shareholder of Dalian Thermal Power.
Public information shows that Hengli Petrochemical started in Shengze, Jiangsu Province and is a leader in the private large-scale refining and chemical industry. It has a processing capacity of 20 million tons of crude oil and 5 million tons of raw coal. It is the first listed chemical new materials company in the industry to realize the integrated operation of the entire industrial chain of “crude oil-aromatics, olefins-PTA, ethylene glycol-polyester new materials” .
In recent years, Hengli Petrochemical has been working hard to create a “dual cycle” pattern of coordinated development of the “big chemical” platform and the “new materials” business. The split of Kanghui New Materials and its backdoor listing is an important measure for Hengli Petrochemical to expand its second growth curve and increase its presence in the field of new materials.
Plan to spin off subsidiary and go public
On April 14, Hengli Petrochemical, Hengli Chemical Fiber, Dalian Thermal Power and Dalian Thermal Power Group signed the “Agreement of Intention on Major Asset Reorganization”. Dalian Thermal Power plans to carry out a major asset reorganization, including Dalian Thermal Power intends to purchase all assets and liabilities from Dalian Thermal Power Group and its designated entities; Dalian Thermal Power will purchase Kanghui New Materials 100 held by Hengli Petrochemical and Hengli Chemical Fiber through the issuance of shares. % equity.
Hengli Petrochemical stated that this spin-off will not cause the company to lose control of Kanghui New Materials, will not have a substantial impact on the company’s ongoing operations of other business segments, and will not damage the company’s independent listing status and sustained profitability. .
Hengli Petrochemical also stated that this spin-off still needs to meet a number of conditions before it can be implemented, including but not limited to obtaining formal approval of the spin-off plan from the company’s shareholders’ meeting and approval from the competent regulatory agencies. There is uncertainty as to whether this spin-off can obtain the above-mentioned approvals or approvals and when the relevant approvals or approvals will ultimately be obtained.
This transaction is still in the early planning stage. The parties involved in the transaction have not yet signed a formal transaction agreement. The specific transaction plan is still under negotiation and demonstration. Due diligence, auditing, and evaluation work will be carried out in the future.
According to relevant regulations, Dalian Thermal Power’s stocks will be suspended from trading on April 15 when the market opens, and the suspension time will not exceed 10 trading days.
It is reported that Dalian Thermal Power’s main business is combined heat and power, central heating, etc. In the first three quarters of 2021, the company’s net profit attributable to the parent company was a loss of 41.3909 million yuan. The company expects a loss of 130 million yuan to 150 million yuan in 2021. At present, the company’s total market value is approximately 1.7 billion yuan.
Accelerate the layout of new materials
Since Hengli Petrochemical entered the capital market, it has implemented a series of large projects represented by the 20 million tons/year refining and chemical integration project. Its business scale has continued to expand and its operating performance has continued to improve.
In 2021, Hengli Petrochemical achieved revenue of 197.97 billion yuan, a year-on-year increase of 29.92%; net profit attributable to the parent company was 15.531 billion yuan, a year-on-year increase of 15.37%. The company’s revenue and profit scale in 2021 both hit record highs.
Fan Hongwei, chairman of Hengli Petrochemical, previously said in an exclusive interview with reporters that while the company continues to consolidate and expand its upstream advantages in the “big chemical” sector with “refining + ethylene + coalification” as its industrial carrier, it will further accelerate the development of new materials downstream. For the development of the business segment, we will continue to increase the development momentum of the new materials business, create a “second growth curve”, and accelerate the upgrade to the “platform + new materials” development model.
It is worth mentioning that at present, Hengli Petrochemical’s refining and ethylene businesses have become the cornerstone of the company’s profitability, and the proportion of the downstream new chemical materials sector has expanded year by year, including differentiated polyester yarn, functional films, new engineering plastics and biodegradable materials. The business of materials with high R&D properties such as new degradable materials is operating well.
Against this development background, Kanghui New Materials, which is mainly engaged in new materials business, is undoubtedly an important platform for Hengli Petrochemical to accelerate the layout of the new materials industry.
Kanghui New Materials is Hengli Petrochemical’s main development platform for differentiated, high-performance green environmentally friendly films and new plastic materials and a national high-tech enterprise.
In recent years, Kanghui New Materials has made great achievements in mid-to-high-end functions.The industry competitiveness in the fields of plastic films and new plastic materials continues to improve, and it has become the first-class domestic level.
On December 26, 2021, the equipment procurement signing ceremony for Hengli Petrochemical’s wet separator production line was held in Hengli (Suzhou) Industrial Park. Kanghui New Materials will introduce a total of 12 wet-process lithium battery separator production lines from Japan’s Shibaura Machinery Co., Ltd. and Qingdao Zhongke Hualian New Materials Co., Ltd., with an annual production capacity of 1.6 billion square meters. This marks that Hengli Petrochemical will enter the field of lithium battery separators and enter the new energy materials track in the chemical industry.
Currently, Kanghui New Materials has an annual production capacity of 240,000 tons of PBT engineering plastics at its Yingkou base. It is the largest PBT manufacturer in China and is mainly used in automotive parts, polymer alloys, optical cable protective sleeves, electronic appliances and other industrial fields.
In addition, the company has an annual production capacity of 385,000 tons of BOPET functional films, which are used in high value-added links such as BOPET’s optical equipment, release protection, electronic appliances, etc. It also has the largest single-unit annual production capacity of 33,000 tons of PBAT in China based on independent technology. , used in green and environmentally friendly applications such as PBS/PBAT food-grade shopping bags, tableware and straws.
In terms of mid-to-high-end product research and development, in 2021, the highly smooth MLCC release base film independently developed by Kanghui New Materials has achieved mass production. It is worth mentioning that the 12-micron online silicon-coated release film developed by Kanghui New Materials has been successfully mass-produced and exported, becoming the only domestic company and the second company in the world to produce products of this thickness, with a monthly production capacity of more than 60 million square meters. rice.
Industry insiders said that for subsidiaries, spin-off and listing can improve management efficiency, better focus on the main business, and expand greater financing space through the capital market platform. This time Hengli Petrochemical plans to spin off Kanghui New Materials and go public, which will be of great significance to its efforts to strengthen and expand the new materials industry.
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